App Install CampaignsMobile MarketingProgrammatic AdvertisingTrends

Bryan Tamsir by Bryan Tamsir | October 27, 2020

Are CPMs correlated with down funnel metrics? Common sense would tell us yes, and that it’s an inverse relationship – the higher the CPM, the lower the performance and vice versa.

This makes sense on paper – the higher the cost to acquire a user, the lower the return on investment. But we wanted to see what the data had to say.

The data

We looked at the correlation coefficient between CPMs and down funnel metrics (CPIs, CPAs and ROAS) for our top 10 customers over a 12 month period (January-December 2019). 

  • A correlation coefficient of 1 indicates a positive correlation. If costs go up, then ROI also goes up. 
  • A correlation coefficient of -1 indicates a negative correlation. In this case, if costs go up, then ROI goes down.
  • A correlation of 0 indicates no relationship. This means that if costs go up, there is no increase or decrease in ROI.

The results

Here is what we found:

Correlation coefficientCPM to CPICPM to CPACPM to ROAS
Average-0.05 0.17-0.08
Range-0.95 to 0.89-0.62 to 0.79-0.77 to 0.93

The data shows that overall, there is little correlation between CPMs and down funnel metrics like CPI, CPA, and ROAS. On a month to month basis, the correlation coefficients fluctuated wildly, with some months being positive and others negative. Hence, it was impossible to pinpoint what the definitive relationship is between CPM and performance.

What does this mean for you?

CPMs only tell a small portion of the story and should not be used to forecast performance. 

Instead, marketers are advised to investigate down funnel metrics to see the full picture. These findings are especially important for budget planning as you could lose out on potential value if you’re using the wrong assumptions about the correlation between CPMs and performance. For example, even though a campaign’s CPMs may rise, the ROAS and conversation rates could also increase. 

Hence we recommend that marketers focus on ROAS and conversion rates instead of CPM trends, which can fluctuate depending on a number of factors, including seasonality and app vertical.